Shree Digvijay Cement Co. Ltd. (SHREDIGCEM) - Auditors Report

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Company auditors report

To the members of Shree Digvijay Cement Co Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Shree Digvijay Cement Co Limited (the Company) which comprise the balance sheet as at 31 March 2019and the statement of profit and loss(including other comprehensive income) statement of changes in equity and statement of cash flows for the yea r then endedand notes to the financial statementsincluding a summary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Companies Act 2013 (Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31 March 2019 and profit and other comprehensive income changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.

Litigations and contingencies

See note 25 and 28 to the financial statements

The key audit matter

How the matter was addressed in our audit

The Company is exposed to a variety of different Central and State laws regulations and interpretations there of. In this regulatory environment there is an inherent risk of litigations and claims

Our procedures included:

In the normal course of business provisions and contingent liability disclosures for litigations and claims may arise from direct and indirect tax proceedings legal proceedings including regulatory and other government/department proceedings as well as investigations by authorities and commercial claims.

Inquiring the status of significant known actual and potential litigation with the Company's in-house Legal Counsel and other senior management personnel who have knowledge of these matters and critically assessing their responses.

Obtaining on a sample basis written responses from the Company's in-house legal counsel containing their views and conclusions on material exposures and any related litigation and considered the same in evaluating the appropriateness of the Company's provisions or disclosures on such matters.

Management applies significant judgement in estimating the likelihood of the future outcome in each case when considering whether and how much to provide or in determining the required disclosure for the potential exposure of each matter. This is due to the highly complex nature and magnitude of the legal matters involved along with the fact that resolution of tax and legal proceedings may span over multiple years and may involve protracted negotiation or litigation.

Reading the latest correspondence between the Company and the various tax/legal authorities or plaintiffs and attorneys where applicable for matters selected on sample basis for detailed evaluation.

These estimates could change substantially over time as new facts emerge and each legal case progresses

For the most significant of the matters we assess relevant historical and recent judgments passed by the court authorities and considering legal opinion where obtained by management from external lawyers to challenge the basis used for the provisions recorded and the disclosures made by the Company.

Given the inherent complexity and magnitude of potential exposures across the Company and the judgement necessary to estimate the amount of provisions required or to determine required disclosures this is a key audit matter.

With respect to tax matters involving our tax specialists and discussing with the Company's tax officers their views and strategies on significant cases as well as the related technical grounds relating to their conclusions based on applicable tax laws.

Challenging the decisions and rationale for provisions held or for decisions not to record provisions or make disclosures.

For those matters where management concluded that no provisions should be recorded we have reviewed the adequacy and completeness of the Company's disclosures.

The recoverability of recognized deferred tax assets is in part dependent on the Group's ability to generate future taxable profits sufficient to utilize deductible temporary differences tax credits and tax losses (before they expire) We have determined this as a key audit matter due to inherent uncertainty in forecasting the amount and timing of future taxable profits and the reversal of temporary differences.

- assessing the accuracy of forecast future taxable profits approved by the Board by evaluating historical forecasting accuracy and comparing the assumptions such as projected growth rates with our own expectations of those assumptions derived from our knowledge of the industry and our understanding obtained during our audit including where applicable their consistency with business plans.

- evaluating the adequacy of the financial statement disclosures.

Other Information

The Company's management and Board of Directors are responsible for the other information. The other information comprises of Director's report and Management Discussion and Analysis included in the Company's annual report but does not include the financial statements and our auditors' report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Management's Responsibility for the Financial Statements

The Company's management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the state of affairsprofit and other comprehensive income changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting record sin accordance with the provisions of the Act for safe guarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.

In preparing the financial statements management and Board of Directors are responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter

The financial information of the Company for the year ended 31 March 2018 included in these financial statements had been audited by another firm of Chartered Accountants who had expressed an unmodified opinion thereon as per their reports dated 23 April 2018 which has been furnished to us by the Management and has been relied upon by us for the purpose of our audit.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 (the Order) issued by the Central Government in terms of Section 143 (11) of the Act we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

(A) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The balance sheet the statement of profit and loss (including other comprehensive income) the statement of changes in equity and the statement of cash flows dealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 1April 2019taken on record by the Board of Directors none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to financial statementsof the Company and the operating effectiveness of such controls refer to our separate Report in 'Annexure B.

(B) With respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 on its financial position in its financial statements - Refer Note 28to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. The disclosures in the financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made in these financial statements since they do not pertain to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditors' Report under Section 197(16):

In our opinion and according to the information and explanations given to us the remuneration paid by the Company to its directors during the current yearis in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

For B S R& Associates LLP

Chartered Accountants

Firm's Registration No. 116231W/W-100024

Jeyur Shah

Place: Ahmedabad

Partner

Date: 30 April 2019

Membership No. 045754

Annexure A to the Independent Auditor's Report - 31 March 2019

(referred to in our report of even date)The Annexure referred to in Independent Auditor's Report to the members of the Company on the financial statements for the year ended 31 March 2019 we report the following:

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets ('Property plant and equipment).

(b) The Company has are gular programme of physical verification of its fixed assets ('Property plant and equipment) by which all items of fixed assets ('Property plant and equipment) are verifie donce in three years. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme a portion of fixed assets ('property plant and equipment) has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company the title deeds of immovable properties are held in the name of the Company.

(ii) The inventory has been physically verified by the management during the year. In our opinion the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) According to information and explanations given to us the Company has not granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register required to be maintained under Section 189 of the Companies Act 2013 (the Act) and accordingly paragraph 3 (iii) (a) (b) and (c) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us the Company has not given any loan made any investment given any guarantee or provided any security under Section 185 and 186 of the Act. Accordingly paragraph 3 (iv) of the Order is not applicable to the Company.

(v) In our opinion and according to the information and explanations given to us the Company has not accepted deposits from public in accordance with the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder. Accordingly paragraph 3 (v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014 as amended prescribed by the Central Government under Section 148 (1) of the Act and are of the opinion that prima facie the prescribed cost records have been made and maintained. However we have not made a detailed examination of such records with a view to determine whether they are accurate or complete.

(vi) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident fund Profession tax Income-tax Sales-tax Service tax Duty of customs Goods and Service tax Value added tax Cess and other material statutory dues have been regularly deposited during the year with the appropriate authorities.

According to the information and explanations given to us no undisputed amounts payable in respect of Provident fund Profession tax Income-tax Sales-tax Service tax Duty of customs Goods and Service tax Value added tax Cess and other material statutory dues were in arrears as at 31 March 2019 for a period of more than six months from the date they became payable.

Pending clarity on the matter as explained in Note 28 (e) to the Financial Statements the Company is currently unable to determine the extent of arrears of such provident fund.

As explained to us the provisions of employee state insurance is not applicable

(b) According to the information and explanations given to us there are no dues of Income-tax Sales-tax Service tax duty of customs duty of excise and Value added tax which have not been deposited with the appropriate authorities on account of any dispute except the following:

Name of the statute

Nature of dues

Amount demanded (Rs. in lakhs)

Amount under dispute not deposited (Rs. in lakhs)

Period to which the amount relates

Forum where dispute is pending

The Central Excise Act 1944

Excise duty

3057.68

2995.70

Financial year 2002-03 2007-08 to 2010-11

The Customs Excise and Service Tax Appellate Tribunal

48.45

46.59

Financial year 2009-10 to 2013-14

Commissioner (Appeals) Ahmedabad

516.95

516.95

Financial year 2008-09 to 2012-13

Commissioner (Appeals) Rajkot

The Finance Act 1994

Service tax

1477.32

1370.92

Financial year 2005-06 to 2014-15

The Customs Excise and Service Tax Appellate Tribunal

27.44

27.44

Financial year 2005-06

Commissioner (Appeals) Rajkot

The Customers Act 1962

Customs duty

451.55

100.00

Financial year 2011-12

The Customs Excise and Service Tax Appellate Tribunal

Sales Tax Act of respective states

Valued added tax

112.93

50.83

Financial year 2009-10 to 2011-12

Joint Commissioner (Appeal)

Sales tax

6.27

5.74

Financial year 1995-96 and 1997-98

Commercial Tax Officer Rajasthan

16.52

-

Financial year 1999-00

Assistant Sales Tax Commissioner Jamnagar

3.01

2.41

Financial year 1992-93 to 1994-95

Sales Tax Officer Jamnagar

(viii) In our opinion and according to the information and explanations given to us the Company has not defaulted in repayment of dues to its bankers. The Company does not have any loans or borrowings from financial institutions and Government or dues to debenture holders.

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) or term loans. Accordingly reporting under paragraph 3(ix) of the Order is not applicable to the Company.

(x) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us we have neither come across any instance of fraud by the Company or on the Company by its officers or employees noticed or reported during the year nor have we been informed of any such case by the management.

(xi) According to the information and explanations give to us and based on our examination of the records of the Company the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us the Company is not a Nidhi company as prescribed under Section 406 of the Act. Accordingly paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us and based on our examination of the records of the Company the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly paragraph 3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is not applicable.

For B S R & Associates LLP

Chartered Accountants

Firm's registration number: 116231W/W-100024

Jeyur Shah

Place : Ahmedabad

Partner

Date : 30 April 2019

Membership No. 045754

Annexure B to the Independent Auditor's Report on the financial statements of Shree Digvijay Cement Co Limited for the year ended 31 March 2019

Report on the internal financial controls with reference to the aforesaid financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)

(Referred to in paragraph (f) under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statements of Shree Digvijay Cement Co Limited (the Company) as of 31 March 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

In our opinion the Company has in all material respects adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31 March 2019 based on the internal controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the Guidance Note).

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal control with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013 (hereinafter referred to as the Act).

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing prescribed under Section 143(10) of the Act to the extent applicable to an audit of internal financial controls with reference to financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements were established and maintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the Auditor's judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls with reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A company's internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial controls with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal financial controls with reference to financial statements including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.